Is Napster Making a Comeback?

Photo courtesy of wired.com.

Best known as the worlds’ first illegal digital music brand, Napster is rising from its grave as one of the top three streaming sites. Napster and it’s parent company, Rhapsody, now count more than 2 million paid subscribers. Napster once made a name for itself as the first completely global digital music brand for peer-to-peer music exchanges. It just wasn’t exactly legal, per say. The company was shut down in 2000 by the The Recording Industry Association of America, or RIAA (which represents BMG, Sony Music, Warner Music Group and EMI) for violating copyright law.

Napster burned briefly, but intensely, and despite backlash from the recording industry, the flame hasn’t died out just yet. Napster ended up going through a few owners post-2000 lawsuit, and ultimately ended up with Rhapsody, an American subscription service. Today the partnership announced they had 2 million paying subscribers, up 300,000 members from about 3 months ago in April. Napster’s Sr. Vice President and General Manager for Europe, Thorsten Schliesche, cites Rhapsody’s partnership with T-Mobile and Napster’s expansion into Latin America as key sources of growth. Schliesche also claims that Napster and Rhapsody have “finally established [themselves] among the top 2-3 streaming services globally.”

This past April, Napster quoted figures of 1.7 million subscribers, up 63% on the previous year. These numbers suggest the streaming service had been adding about 54,000 subscribers per month. This would mean this rate has almost doubled to about 100,000 per month since April. In comparison, competitor Spotifyaveraged 286, 000 new subscribers per month between March 2013 to May 2014.

Rhapsody and Napster have been pushing growth through a personalized radio streaming service called unRadio, launched in conjunction with T-Mobile. The idea sounds familiar when compared to U.S. companies like Pandora and iTunes Radio. However, in Europe, the concept is less common, and may see more success in European markets. unRadio plans to launch first in France (reinventing itself as Napster Découverte) alongside mobile operator SFR, charging just €3.95 a month.

Schliesche says that he sees Napster and Rhapsody as “a Switzerland” in that they have an advantage because they do not belong to a “big hardware manufacturer or a big ad agency” and because they “are not trying to sell stuff other than music.” He goes on to say it’s easier for companies like Napster to work with mobile carriers like SFR and T-Mobile than a competitor like Beats. He makes a fair point on Beats’ recent partnership: “If a carrier wants to work with Beats, it’s not a decision to work with a music service any more: it’s ‘would we like to go into a relationship with Apple?’”

Rhapsody and Napster appear uninterested in a free streaming model funded by advertising. The companies are focusing on growth of paid subscribers for now. Vice President Schliesche says “We do not strongly believe in this kind of ad-funded model. If you look at the size of Spotify, they have become really big. But if you look at their financial statements for their last two years, they have lost around 90m Euros.”

Napster’s unexpected return also revives an all-too-familiar question: is web-based music file swapping so detrimental to the music industry? A survey of 2,200 Napster users once revealed that Napster users were likely to buy more albums than non-users. It’s small survey for certain, but it seems that if music-lovers want music, they’ll find a way to get it, whether through streaming, iTunes, free downloads, or internet-based file-sharing.